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HomeMy WebLinkAboutCS 32-07 Citq (1~ REPORT TO COUNCIL Report Number: CS 32-07 Date: July 23, 2007 133 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: COMRIF Asset Management Program Funding Recommendation: 1. That Report CS 32-07 of the Director, Corporate Services & Treasurer be received; 2. That the Mayor and Chief Administrative Officer be authorized to execute the Funding Agreement for Asset Management Program (AMP) Project under the Canada - Ontario Municipal Rural Infrastructure Fund (COMRIF) program in order to obtain funding in the amount of $32,440, and 3. That the appropriate officials of the City of Pickering be authorized to take the necessary actions to give effect thereto. Executive Summary: Starting January 1, 2009, Public Sector Accounting Board (PSAB) standards will require Canadian municipalities to record tangible capital assets in their accounting systems rather than expensing the costs as is currently done. The implementation of these standards will require changes to accounting and budgeting systems and processes to be able to capture and record tangible capital assets, account for their depreciation and account for their improvements, replacements, disposals or impairments. Corporate Services' staff were successful in obtaining COMRIF funding to assist in the implementation of these asset management requirements. These funds can be used for consulting, software, hardware, training and staff costs related to the implementation of the asset management program. Financial Implications: The City is to receive $32,440 to assist in the implementation of the asset management program. Under the COMRIF program rules, the City has to provide 1/3 matching funds of the total project cost of $48,660, to be eligible for the program. The City's contribution of $16,220 was provided for in the 2007 Current Budget for Finance. Report CS 32-07 July 23,2007 S.ubject: COMRIF Asset Management Program Funding -+-3-4 Page 2 Sustainability Implications: As the existing capital asset base ages and with an increased demand for new capital assets, the ability of local government to sustain these services will become more challenging. Information about the existing capital asset base such as cost, need for replacement will assist the City in making critical decisions to ensure the financial sustainability of the City and its asset base. Background: The City of Pickering is responsible for the management of a diverse range of capital assets. In addition to significant land holdings, the City also owns buildings, fleet vehicles, equipment, storm sewers, library books, etc. to support basic municipal services. There is prima facie evidence that municipal governments are facing major challenges financing the maintenance, renewal and replacement of aging capital assets. There appears to be an existing information gap regarding the "status or condition" of the City's tangible capital assets and the reporting of this information on the financial statements. In other words, municipal financial statements, currently do not provide any information regarding the value of the City's assets. Reporting of asset information on the financial statements can bridge the "information gap" by bringing capital asset information to the attention of the public and other users. Bridqinq the Information Gap Starting, January 1, 2009, Canadian municipalities will be required to report on their tangible capital assets on an accrual basis (depreciation). This decision was made by the Public Sector Accounting Board (PSAB) at its meeting of June 12, 2006. The Ontario Ministry of Municipal Affairs and Housing (MMAH) prescribes that all Ontario municipalities must follow PSAB directives and guidelines for accounting and financial reporting. The PSAB decision means that the City will have to start recording tangible capital assets in the City's accounting records, charging depreciation expense and report these assets in the City's Financial Statements. The impact of these changes is significant and will affect all departments of the City. Major impacts include the following: . Develop a comprehensive inventory and valuation of capital assets including: land, roads, bridges, buildings, storm water systems, park play structures, library books and reference materials, information technology hardware & software, vehicles and equipment. . Develop new budgeting and accounting systems and or processes. . Determine the historical costs of all capital assets (regardless of age) including development of valuation models where historical data is not available. . Determine the useful/economic life of all capital assets beyond the information currently available for the City's major assets. Report CS 32-07 July 23, 2007 . 135 Subject: COMRIF Asset Management Program Funding Page 3 Use of COMRIF Funds Under the COMRIF AMP program, the gross funding for the project is $48,660 of which COMRIF will provide a grant or financial assistance in the amount of $32,440 with the City's matching contribution of $16,220. Staff plan to use these funds by addressing the issues mentioned above. These activities include but are not limited to conducting an inventory of existing assets, determining their remaining useful life, determining their fair market value and depreciation policy and or schedules. A report outlining the impact of the tangible capital reporting requirements and providing the implementation plan is expected to be presented to Council this Fall. Attachments: 1. Schedule "B~' - AMP Project Overview Prepared By: Approved I Endorsed By: ~ ~ Stan Karwowski - ------ Manager, Finance & Taxation Iff ill is . Paterson "TJ " Director, Corporate Services & Treasurer GAP:vw Attachment Recommended for the consideration of Pickering City Council ? ATTACHMENT#-L- TO REPORT # (!.s ~.J..-o7 Asset Management Program Funding Agreement 136 SCHEDULE "B" AMP PROJECT OVERVIEW AMP PROJECT DESCRIPTION AMP FILE #18223 THE CORPORATION OF THE CITY OF PICKERING WORK DESCRIPTION: The City of Pickering will use its allocated Asset Management Program (AMP) funding to address all five stages of asset management. The project commits to: determining the systems and technology needed to manage infrastructure assets, conducting an inventory of all asset conditions, assessing the remaining useful life for each asset and determining future investment needs with life cycle analysis and replacement schedules. In addition, AMP funding will be used to develop policies regarding asset replacement to aid in the development of short and long term infrastructure sustainability plans. FINANCIAL ASSISTANCE I PROJECT BUDGET Federal Maximum Financial Assistance: $48,660.00 $16,220.00 $16,220.00 $32,440.00 Total Eligible Costs: Ontario Maximum Financial Assistance: Maximum Financial Assistance: The Ministry will release all federal and provincial AMP funding once a Final Claim Report has been submitted to the COMRIF Joint Secretariat as set out in Section 6.1 of Schedule "A" of this Agreement. The Ministry is not obligated to pay interest on any costs incurred prior to the submission, review and reimbursement of all eligible AMP project costs.